FLYPAPER EFFECT: AN EMPIRICAL STUDY OF INDONESIA CASE (2004 – 2010)
DOI:
https://doi.org/10.31092/jia.v1i1.19Keywords:
Flypaper Effect, Intergovernmental Transfer, Intergovernmental GrantsAbstract
Flypaper effect is a well-known phenomenon in public finance with regard to intergovernmental transfer. It exists when an increase in grants is more stimulative than a similar increase in income towards the local government (recipient’s) expenditure. Numerous studies had occurred to both identify the existence of flypaper effect as well as to determine the cause. Most researchers worldwide disagree about the existence and even more disagree upon different results regarding the existence and the cause of different results. Two studies had been done in Indonesia within municipalities and they resulted in differing conclusions of the existence. This study is meant to identify flypaper effect within provincial level using what is hoped to be the proper way to investigate the existence.
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